Whenever a crisis occurs, financial markets start to fluctuate and stock markets plummet, do you have the impression that gold price always performs well at this time, and it seems to be a defensive asset that can offset stock losses? But if we looked back to the 2008 Subprime Crisis, the COVID-19 outbreak in 2020 and the most recently: the reciprocal tariffs policy by the US President Trump, the fact was: Gold would also be sold off when all the investors get panic, and the price of gold will fall along with the stock price, which cannot protect your stock position very much.Gold prices would not start to rise until financial markets begin to stabilize and panic levels decrease. (usually accompanied by central banks starting printing money)
After Trump announced reciprocal tariffs on Apr 2, 2025 – gold price fell along with stock prices
After Trump’s announcement of reciprocal tariffs on April 2, stocks and gold moved in roughly the same direction: the S&P 500 fell 11%, while gold prices fell more than 4%.
Is it a coincidence that stocks and gold fell together? Let's take a look at the 2020 COVID-19 outbreak...
The stock market began to fall on 2020/02/21, starting from the day before the fall until it hit the bottom on the 23rd of the next month:the S&P 500 fell more than 35%, while gold fell more than 8% during the same period.
How did the price of gold perform during the 2008 Great Financial Crisis?
After Lehman Brothers declared bankruptcy on September 15, 2008,the S&P 500 continued to fluctuate between -20% and -30% within three months from that day, while gold fluctuated greatly, rising around 15% first and then falling by more than 20%.
Gold is not a safe haven when the market was extremely panic
Assets which can be considered as safe heaven usually have one of the two following characteristics: "rising when the stock market falls" or "not being affected by the plummet of stock market"in order to protect your stock position, so that you can:
1. Reduce mark to market losses and not be affect the mood
2. Take advantage of the situation to sell rising safe-haven assets and buy falling stocks, so that the profits of stocks will increase after they bottom out and bounce back.
But looking back into the three major events above that caused extreme panic in the stock market (increased volatility), during the 2025 Trump's trade war and the 2020 COVID-19, the trends of stock prices and gold prices were extremely similar, and gold did not show the two characteristics of a safe-haven asset. During the 2008 Great Financial Crisis, the trend of gold prices was quite different from that of the stock market, but after the bankruptcy of Lehman Brothers, it also fell 20% along with the US stock market. Therefore, in the high volatility moments, I don't think that gold is an effective asset for hedging, but what if we look at it over a longer period of time? At this time, gold may be a good choice. (to be continued)
Sources
historical prices of GLD on Investing.com
historical prices of the S&P 500 on Investing.com
historical data of VIX on Investing.com
English 
Chinese